R&W insurance broker commission
For R&W insurance, why do PE firms use insurance brokers vs. contacting the insurers directly and running the same process? Is the value-add worth the broker fee?
For R&W insurance, why do PE firms use insurance brokers vs. contacting the insurers directly and running the same process? Is the value-add worth the broker fee?
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The carrier will pay the broker commission, not the PE firm.
But couldn’t you still cut out the broker and negotiate to save the commission?
Brokers have incredible value in the R&W market. Let's say you want to place a policy for a deal you're doing. Do you know which 15 insurance carriers to call and the specific underwriter that will understand your deal? Do you know specific policy limit options, retention levels, exclusion wording, etc.? My guess is that Marsh or Aon see hundreds of deals a year and know exactly how to negotiate terms vs. a single fund who may place a handful per year across different industries, types of companies, etc. And if you end up having a claim, the broker can help you navigate the claims process which is a bit of a nightmare these days because R&W carriers are way understaffed relative to the number of in-force policies. If the carrier is being difficult, it's helpful to have someone who is dealing with the carrier across dozens of claims and can anticipate the hot button issues, etc.
That’s a good explanation, thanks for the input
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